Marketers Tell Their Side at House Privacy Hearing

Direct marketers testified at a House subcommittee hearing yesterday and privacy groups said they would file a complaint against Microsoft with the Federal Trade Commission.

The hearing, "How Do Businesses Use Customer Information: Is the Customer's Privacy Protected" took place before the House subcommittee on commerce, trade and consumer protection. Marketers and data compilers were split into two panels. The first included representatives from IBM, Amazon.com, Procter & Gamble, General Motors Corp. and Lands' End Inc. The three major consumer data compilers -- Experian, Acxiom and Equifax -- made up the second panel.

A common theme in testimony from the two panels was that data collection not only is essential to business, but also benefits consumers. Participants gave brief overview statements about data collection and its uses, and several participants aimed to dispel common misconceptions about those practices.

"I suspect the myth most responsible for this meeting is that marketing information is used to create detailed, individual consumer profiles," said Deborah Zuccarini, executive vice president and chief marketing officer at Experian, Orange, CA. "With all due respect, marketers don't care who you are as an individual."

After the hearing, Zuccarini said she hoped that subcommittee members came away with an understanding that the responsible use of data is good for businesses and consumers.

David Johnson, vice president of direct marketing at Lands' End, said his firm has no desire to send catalogs to customers who do not want them.

At least two panel members testified that federal privacy legislation was unnecessary to ensure protection of consumer information.

"We believe there is no inherent need for privacy legislation," said Paul Misener, vice president of global public policy at Amazon.com, Seattle.

John Ford, chief policy officer at Equifax, Atlanta, said that the risk associated with data collection was minimal.

If federal privacy legislation were enacted, however, marketers in the first panel said that it should pre-empt state laws, exclude private rights of action and apply to online as well as offline data collection and practices.

Meanwhile, the Electronic Privacy Information Center along with Junkbusters and the Privacy Foundation said that the groups will file a complaint with the Federal Trade Commission alleging unfair or deceptive trade practices by Microsoft.

The privacy groups took issue with Microsoft's Passport user-identification system, which stores users' personal information, and the firm's intention to incorporate it into its new Windows XP operating system.

Passport is part of Microsoft's HailStorm initiative, which is expected to roll out next year. Microsoft claims HailStorm will allow users to store a wide variety of personal information, eliminating the need to re-enter such data at different Web sites. It will function as a subscription service, according to Microsoft, and users' personal data will not be shared with third parties.

Even so, EPIC executive director Marc Rotenberg told The New York Times that his organization has concerns about Passport, including Microsoft's ability to keep the data secure.

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